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Re: [sharechat] TLS

From: "" <>
Date: Sun, 22 Feb 2004 22:47:13 +1300

Hi winner69,
>Back to Telstra. Your words "I think Telstra does have 
>a low downside risk.  
>That's because it is the dominant player in the 
>telecommunications industry in Australasia by far" 
>echoed in my thoughts when I saw this dude on Business Sunday
>comparing Telstra today to BT (British Telecom) of a few years ago. 
>BT was in that same position a few years ago before competition
>undermined it soo much it needed a huge bailout. 

Competition was not the reason BT needed a huge cash issue.  The 
reason for that was that BT paid far too much for 3G mobile phone 
licences both in Britain and Germany.   What is more, the licence 
carried an obligation for an enormous amount of capital expenditure to 
set up the network, so there was yet more major negative cash flow 
stretching years out into the future.   

The final bit of the resue plan was when BT was split into 'BT Group' 
and MmO2 (the multimedia phone network arm).    MmO2 is still a cash 
burner, even today.

>I think that dude
>today was trying to say that Telstra needs to change it ways and not
>rely on its traditional thinking ... maybe Ziggy been around too long.

My impression is just the opposite.   Telstra has relied too much on 
'non-traditional thinking', which lead them to the PCCW purchase in 
the first place.  

I'll pass on whether Ziggy is past his use by date.

>Interesting view that somebody suggests that that could happen to
>Telstra  - but that downside risk such an event would take some time
>to eventuate. 

Telstra has about the same popular public profile in Australia, as 
Telecom NZ has in NZ.    But I don't see that the fact of Telecom being 
the major player in NZ, will lead to their early demise as market leader.  
Quite the contrary in fact.

>As such any theory (alright hope or wishful thinking)
>that the TLS shareprice will rise from 467 (yes that is the answer
>answer to the ultimate question) to 542 odd is not affected.
>Go Telstra over the next few weeks

...and the next few years :-)


discl: hold TLS

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